BIS: 93% of Central Banks Working on Digital Currencies

A new Bank of International Settlements (BIS) survey shows the increasing popularity of central bank digital currencies.

The survey, released Monday (July 10), found that the share of central banks involved in some sort of central bank digital currency (CBDC) project rose to 93%, while uncertainty about short-term CBDC issuance is waning.

“The survey suggests that there could be 15 retail and nine wholesale CBDCs publicly circulating in 2030,” BIS said, noting that work on retail CBDCs is further along than on wholesale coins.

The BIS says wholesale CBDCs could let financial institutions access “new functionalities enabled by tokenization, such as composability and programmability.”

And as PYMNTS wrote last week, tokenized deposits “are being more widely considered and championed across far-flung corners of banking.”

For example, in a speech during the Innovate Finance Global Summit in April in the U.K, Bank of England Deputy Governor Sir Jon Cunliffe said tokenized deposits offer “some or all of the functionality and efficiency claimed for stablecoins, allowing banks deposits to compete better with nonbank payment coins.”

And Rob Hunter, former deputy general counsel and director of regulatory and legislative affairs at The Clearing House (TCH), told Karen Webster in an interview late last year, “There’s no reason why banks shouldn’t be allowed to use a new technology to perform functions that are clearly within the business of banking itself,” including “functions like deposit taking and transferring value that banks have been doing for hundreds of years.”

The BIS notes that four central banks have already issued a live retail CBDC: The Bahamas, the Eastern Caribbean, Jamaica and Nigeria.

And while no new retail CBDCs were launched last year, it’s likely there are more to come, as 18% of the banks surveyed said they will probably put out a retail CBDC “in the near term.”

Other banks are continuing studies about the feasibility of a CBDC, such as the Federal Reserve in the U.S., which last week released the results of its own study into the use of CBDCs in foreign and domestic payments.

The BIS survey also ties the rising interest in CBDCs to the recent cryptocurrency and banking crises, including last year’s collapse of crypto exchange FTX and this year’s failure of Silicon Valley Bank and Signature Bank, which served a number of crypto clients.

According to the BIS, “60% of central banks said that the emergence of stablecoins and other cryptoassets has accelerated their work on CBDC.”